The National Bureau of Statistics, to use an economic jargon, released the country’s total public portfolio last week. It showed that as at the end of March this year, just about the time the Covid-19 pandemic forced us indoors to distance ourselves from death, the federal and state government had a total debt portfolio of some N28.63 trillion. The bureau did not give full details of the debts the federal government had so far incurred but it is not difficult to see that it remains the borrower-in-chief. External do-gooders have not shown any unwillingness to lend to a government willing to borrow, as my colleague likes to put it, nyafy-nyafu.
I believe that the debt figures released by the bureau are now hopelessly outdated. The federal government, thanks to the vigorous nod of the senate, has borrowed more dollars from external sources since March to help keep it liquid after a fashion. Or, to put it more correctly, the government took the loans to help it, if you would excuse the expression, rejig our scatter-scatter infrastructure.
The national debt has progressively ballooned from N3.97 trillion in 2016 when the Buhari administration went for a $30 billion jumbo loan to the present N28.63 trillion. It has become even worse because the figures as at March could not have taken into consideration what has been borrowed by the federal government since then.
The national economy, even before Covid-19 threw some spanners into the work of its management, was not in a shape the government had the luxury to be proud of. And because everything in the country rides on the health of the economy, providing it with a life support system to stop it from dancing the kokoma becomes a patriotic response to the challenge it poses for the administration. As the late Winston Churchill would put it, some patriotism.
Borrowing is always an attractive option for the government; an option that it finds hard to resist. Every government, and that is not of much consolation for our country, is a debtor. The problem with borrowing is that it burdens the national economy in the future. The borrower does not repay the loan. That responsibility is unfairly passed on to a succeeding administration. To put it rather crudely, one administration chops the loan and another repays it with interest.
There is a strong argument for taking loans just as there is a strong argument against them. It is only fair to admit that it is not possible at our level of economic development for the government not to seek to keep the national treasury at least half full. President Obasanjo saw where the unbridled resort to borrowing by federal and state governments would lead and stopped the free-for-all that would have today burdened the national economy. But it seems the Buhari administration sees borrowing as the only option to which there is no alternative. Borrowing, I would imagine, saves it from tasking itself and cracking its head over the best or the most pragmatic way to manage our poverty, a situation forced on it, through no fault of its own, by our monocultural economy.
The easy resort to borrowing merely shifts responsibilities to the future and thus raises both moral and political questions. Borrowing, whatever might be the rationale for it, is not as wise it may seem. Borrowing ensures that there is money in the national treasury and we are thus misled into believing that so long as there is some money to spend, we are meeting the critical challenges of properly managing the economy. Not so.
The national economy has had a long history of making all our administrations and the managers of our national economy look inept. Since the oil gluts of the late seventies and the early eighties denied us the full earnings from crude oil, this country began its long trek to the inevitable – the steady descent into poverty. It should come as no surprise that our country reached the ultimate as the poverty capital of the world with nearly half of its hard working citizens, 93 million, officially classified as extremely poor.
Now, the challenges have become even more horrendous. The crash of oil price in the international market means that Nigeria would even earn much less from that source in the months and even years ahead. Add to that what the coronavirus pandemic has done to world economies, and obviously ours not excepted, and you have some idea about the increasing debt burden on our country. This is something that has been dreaded by every developing country since the World/IMF assumed the right to tell countries in economic crises how to manage their economies with a string of conditionalities that made matters even worse for them.
We tend to ignore the very critical challenge of managing poverty. Borrowing from domestic and external sources to shore up the dwindling national earnings cannot qualify as the pragmatic way of managing our poverty challenge. The government ought to find some more creative ways of responding to the challenges of managing our worsening incidence of poverty.
We should be truly worried, as I pointed out here and elsewhere in my argument against the jumbo loan in December 2016 that “Nigeria is inching towards the path it abandoned only a few years ago when the Obasanjo administration successfully negotiated the forgiveness of part of its debts from the Paris Club. We thought we would never trudge that road again. Wrong. President Buhari is taking us back.”
That cannot be good news for a country that experienced the trauma of the economic crisis of the early eighties when, because of our insolvency, the country’s business partners refused to open line of credits for our importers. You would recall that it was Buhari who tackled the problem by committing 45 per cent of our national income to servicing debts and introduced trade by barter by which Nigeria paid for imports with crude oil. In 1983 the N2.5 billion IMF/World Bank bridging loan the late President Shagari sought for was condemned as a jumbo loan, bound inevitably to mortgage the future of our country to our lenders. But in 2016, the $30 billion was not considered a jumbo loan. Nor is the current debt profile evidence of the poor management of the national economy. Ah, yes, memories tend to be long when someone else is at the receiving end and short when it is laundered as contemporary wisdom.
The only man who knew that the first jumbo loan would be followed by other loans that in the end would impose on the country the crushing debt burden was the then Emir of Kano, Alhaji Sanusi Muhammadu Sanusi. He warned against taking the loan. But the yes chorus was deafening because in our national character, no sitting government takes unwise steps in managing the country and its economy. We shoot ourselves in the foot, of course.
Contemporary history has no record of a country that became an economic power through the easy resort to borrowing. I do not think the Buhari administration has exhausted all the options towards the pragmatic management of our economy and with it our poverty. I believe that our dear country has the capacity to do better and prove, as the Indians have done, that while poverty may be inevitable, no nation has an excuse to perpetuate it by failing to do what it must do to free its citizens from its vice grip. India did not borrow to change its economic misfortunes and give the sash to our country.
It did so because its economic managers and experts and politicians hunkered down to explore pragmatic options and once they put their fingers on them, homed on in the challenges of its poverty. The rest is a fascinating story of a nation that emerged from its difficult historical challenges to win plaudits as a contemporary economic miracle and the medical tourism capital of the world.
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